Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2021 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Uniform Guidance requires the auditee to prepare a complete and accurate Schedule of Expenditures of Federal Awards, including the identification of all federal awards expended during the period (2 CFR §200.508(b)). In addition, Uniform Guidance requires the auditee to establish and maintain effective internal control over compliance to provide reasonable assurance that federal awards are identified, tracked, and reported in accordance with applicable statutes, regulations, and the terms and conditions of the federal award (2 CFR §200.303). Condition: The auditee did not have effective internal control over compliance related to the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Specifically, controls were not sufficient to ensure that all federal awards subject to Uniform Guidance requirements were properly identified, Assistance Listing Numbers were accurately determined, and federal expenditures were completely and accurately reported on the SEFA. As a result, material federal awards were omitted from the auditee‑prepared SEFA and errors in federal program identification occurred, which required identification and correction by the auditors. Context: The Schedule of Expenditures of Federal Awards is used to determine major programs and the scope of compliance testing under the Single Audit. Complete and accurate identification of federal awards is critical to ensure appropriate major program determination and compliance coverage. Cause: The auditee had not established formal procedures or an effective review process to ensure that all federal awards were identified and accurately reported on the SEFA. In addition, prior‑year omissions of federal awards were not adequately remediated, contributing to continued deficiencies in SEFA preparation and review. Effect: This significant deficiency resulted in a reasonable possibility that material noncompliance with federal reporting requirements would not be prevented or detected on a timely basis. An incomplete or inaccurate SEFA increases the risk of improper major program determination, inappropriate audit scope, and increased risk of material noncompliance with federal award requirements. Repeat Finding: Yes. Recommendation: We recommend that management design and implement effective internal controls over compliance related to SEFA preparation, including assigning responsibility to personnel with appropriate training in federal award requirements. Management should also implement a documented review process, performed by a knowledgeable individual, to ensure the SEFA is complete, accurate, and compliant with Uniform Guidance prior to submission for audit. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
SEFA Preparation Recommendation: We recommend that management design and implement effective internal controls over compliance related to SEFA preparation, including assigning responsibility to personnel with appropriate training in federal award requirements. Management should also implement a documented review process, performed by a knowledgeable individual, to ensure the SEFA is complete, accurate, and compliant with Uniform Guidance prior to submission for audit. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Reached out to HUD Granter, Third Party Accounting Firm and in 2023. Followed up with a briefing from Auditor in 2025 for this audit. Name(s) of the contact person(s) responsible for corrective action: Sharon Maggard Planned completion date for corrective action plan: Completed
2022-001
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance permits advance payments; however, advance payments must be limited to the minimum amounts needed and timed to meet the immediate cash requirements of the recipient (2 CFR §200.305(b)(1)). In addition, Uniform Guidance requires non‑Federal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that the award is being managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award (2 CFR §200.303). Condition: The auditee billed the Washington State Department of Commerce for the Emergency Rental Assistance Program (ERA2) and received federal funding totaling $8,674,165.38 over the life of the grant. While total eligible expenditures incurred over the life of the grant exceeded this amount, billing activity occurred in advance of eligible expenditures at certain points during the grant period. As a result, the auditee received federal funds in advance of incurring allowable expenditures, resulting in excess federal cash on hand of $47,833.36 at the time of billing. Context: The Emergency Rental Assistance Program (ERAP 2.0) allows for a combination of advance payments and cost‑reimbursement payments. As a result, recipients must maintain controls to ensure that advances are limited to immediate cash needs and reconciled to eligible expenditures incurred Cause: The auditee did not have sufficient procedures in place to ensure that federal reimbursement requests and advance payments were limited to actual eligible expenditures incurred as of the billing date and that excess advances were timely identified and monitored. Effect: The auditee’s billing practices resulted in the receipt of federal funds in advance of incurring allowable costs, which constitutes noncompliance with Uniform Guidance cash‑management requirements. This increased the risk that federal funds were not appropriately limited to immediate cash needs and were not timely identified as advances requiring monitoring or deferral. Repeat Finding: No. Recommendation: We recommend that the auditee strengthen controls over grant billing and cash management to ensure that reimbursement requests and advance payments submitted to the pass‑through entity are limited to immediate cash needs and supported by allowable costs incurred as of the billing date, in accordance with Uniform Guidance requirements. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Cash Management Recommendation: We recommend that the auditee strengthen controls over grant billing and cash management to ensure that reimbursement requests and advance payments submitted to the pass-through entity are limited to immediate cash needs and supported by allowable costs incurred as of the billing date, in accordance with Uniform Guidance requirements. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Advance payments for ERAP were temporary during COVID only. At that time the agency was paying out a vast amount of cash each month. This was not a normal time for cash flow or the community. The agency caught an overspend problem, reported to ERAP manager, and returned the funds to ERAP 2.0 by placing a line of credit to support 300K to stabilize cash flow and cover the ongoing problem of late contract renewals which can be 3 to 6 carried by the agency. This is still in place. Name(s) of the contact person(s) responsible for corrective action: Sharon Maggard Planned completion date for corrective action plan: September 2024
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance requires that costs charged to federal awards be allowable, adequately documented, and supported by appropriate authorization (2 CFR §§200.403 and 200.403(g)). In addition, recipients must establish and maintain effective internal control over federal awards to provide reasonable assurance that federal awards are managed in compliance with applicable statutes, regulations, and the terms and conditions of the federal award (2 CFR §200.303). (This finding is reported as a significant deficiency because, although approval and documentation deficiencies were identified and questioned costs resulted, the errors were not pervasive and did not result in material noncompliance with the federal program.) Condition: During testing of general disbursements charged to federal awards, we identified instances in which required controls over authorization and documentation were not followed. Specifically, of the 40 disbursement transactions tested, 7 transactions lacked evidence of appropriate approval, and 1 transaction lacked sufficient receipt or invoice support. These deficiencies resulted in questioned costs totaling $1,465.44. Context: The population consisted of general disbursement transactions charged to federal awards during the audit period. A judgmental sample of 40 disbursement transactions was selected for testing. Of the 40 transactions tested, 7 transactions lacked evidence of appropriate approval and 1 transaction lacked sufficient receipt or invoice support, resulting in questioned costs totaling $1,465.44. No exceptions were expected based on the auditee’s established policies and procedures requiring approval and documentation of expenditures. Cause: Although the auditee has established procedures related to the approval and documentation of disbursements, these procedures were not consistently performed or documented. Management did not consistently ensure that required approvals and supporting documentation were obtained and retained prior to charging costs to federal awards. Effect: As a result of these control deficiencies, certain costs charged to federal awards were not supported by adequate approval or documentation, resulting in questioned costs of $1,465.44. In addition, inconsistent execution of disbursement controls increases the risk that unallowable or unsupported costs may be charged to federal awards and not detected on a timely basis. Repeat Finding: Yes. Recommendation: We recommend that management reinforce the consistent execution and documentation of existing disbursement approval and documentation procedures. This should include ensuring that all expenditures charged to federal awards are appropriately approved and supported by sufficient documentation prior to payment, and that management periodically monitors compliance with these procedures to confirm they are operating as designed. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Allowable Costs/General Disbursements Recommendation: We recommend that management reinforce the consistent execution and documentation of existing disbursement approval and documentation procedures. This should include ensuring that all expenditure charged to federal awards are appropriately approved and supported by sufficient documentation prior to payment, and that management periodically monitors compliance with these procedures to confirm they are operating as designed. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Reoccurring bills such as utilities, loan payments, contract services and credit card payments do not require an expense request to be included for on going bills. We will review our procedures and update our financial policy. Our financial process includes at least two reviews prior to creating a bill in our accounting system, payments are reviewed by the director or the Deputy Director when signed. We do not use a auto signature all checks are reviewed. The Grantor billing is a P&L detailed report for that grant. This is sorted into grant line items designated billable and non-billable for compliance. Total program cost and billable to grant are tracked every month, by the grant finance manager for compliance prior to billing any grants. Timecards are reviewed, expense requests are reviewed and payments are reviewed. Prior to submission of the invoice to grantor. Name(s) of the contact person(s) responsible for corrective action: Cora Alyea Planned completion date for corrective action plan: Completed in 2023
2022-002
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance 2 CFR §200.430(i) requires that charges to Federal awards for salaries and wages be based on records that accurately reflect the work performed and be supported by a system of internal controls which provides reasonable assurance that charges are accurate, allowable, and properly allocated. Further, 2 CFR §200.303(a) requires the auditee to establish and maintain effective internal control over Federal awards to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The auditee did not maintain adequate internal controls to ensure that employee pay rates charged to Federal awards were appropriately approved and documented. Specifically, documentation supporting management approval of pay rates was not consistently maintained. In addition, for one payroll disbursement tested, the auditee did not maintain a required timesheet supporting the allocation of payroll costs charged to the Federal award, resulting in a lack of adequate time‑and‑effort documentation. Context: All 27 samples lacked payrate approvals and 1 sample of 27 lacked proper timesheet documentation. Cause: Although the auditee has established procedures related to the approval and documentation of disbursements, these procedures were not consistently performed or documented. Management did not consistently ensure that required approvals and supporting documentation were obtained and retained prior to charging costs to federal awards. Effect: The auditee lacked sufficient internal control over payroll costs charged to Federal awards, and payroll costs charged to the Federal award were not fully supported by required time‑and‑effort documentation in one instance. Repeat Finding: Yes. Recommendation: We recommend that the auditee implement procedures to ensure that all employee pay rates charged to Federal awards are appropriately approved and documented, and complete and accurate timesheets or equivalent time‑and‑effort records are maintained for all payroll costs charged to Federal awards. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Allowable Costs/Payroll Disbursements Recommendation: We recommend that the auditee implement procedures to ensure that: all employee pay rates charged to Federal awards are appropriately approved and documented, and complete and accurate timesheets or equivalent time-and-effort records are maintained for all payroll costs charged to Federal awards. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Most Federal grants are renewed annually and have not requested any salary rate adjustments. Payroll line items are a lump sum. Serenity House since 2020 performs annually in May a market rate survey for all job positions to ensure wage rates are equitable to fair market for our County and Non-Profit job type. The sources are documented in the workbook that the annual raise percentages; wage adjustments are calculated for board approval. Our annual performance raises and adjustments is a pool of 1 to 5%, and 3 to 6 employees are below market rate each year. People with a market adjustment do not receive a merit increase. 2023 Merit increase is% that is allocated based on performance scores and management team comparison to everyone in that job category. People are scored by manager this score is reviewed by all managers that have employees in that grouped job class. The reviewing managers agreed highest performer with a 5% and lowest performer 1% Raise distribution is based on the performance review score. 2022 Employees are hired for a specific job when they are given their first time card grant line items for the grant they work on are on the time sheet. That time sheet is reviewed and corrected by the immediate supervisor then reviewed by the operations manager. Turned into the main office receptionist who checks submission against the employee list. Checks math and signatures, initials the times card takes up to payroll. 2023 Payroll double checks each time card when entering time into the payroll module. After all time is enter another employee checks the system addition to timecard. 2020 When Checks are manually signed the time is on the timecard and each check is reviewed. Each employee Name(s) of the contact person(s) responsible for corrective action: Kristin Cowan Planned completion date for corrective action plan: July 1 2023
2022-002
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance 2 CFR §200.302(b) requires non‑Federal entities to maintain effective control over and accountability for Federal awards, including accurate financial reporting. In addition, 2 CFR §200.303(a) requires the auditee to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The grant agreement with the Washington State Department of Commerce further requires that reimbursement requests be submitted in accordance with the approved budget and cost categories. Condition: The client submitted reimbursement requests to the Washington State Department of Commerce using Form 19‑1A; however, the budget line items reported on the Form 19‑1A did not agree to the approved grant budget in all instances tested. Specifically, while the underlying expenditures were allowable and incurred in accordance with the grant agreement, the budget line items selected on the Form 19‑1A were incorrect in every instance tested, resulting in inaccurate budget category reporting to the pass‑through entity. Context: None of Form 19-1A's contain accurate budget line items do not align with the grant or its amendments. Cause: The auditee did not have adequate internal controls in place to ensure that expenditures were consistently and accurately mapped to the correct budget line items when preparing Form 19‑1A reimbursement requests. Specifically, there was no documented review or reconciliation process to verify that the budget categories selected on the Form 19‑1A agreed to the approved grant budget prior to submission. Effect: As a result of this control deficiency, reimbursement requests submitted to the pass‑through entity did not accurately reflect budgeted cost categories, which increases the risk of noncompliance with the terms of the grant agreement. While the costs tested were determined to be allowable, the inaccurate budget allocation could result in improper reporting, increased scrutiny from the grantor, or potential disallowed costs if not corrected. No questioned costs were identified as the expenditures tested were allowable and supported. Repeat Finding: No. Recommendation: We recommend that the auditee implement procedures to ensure that Form 19‑1A reimbursement requests are reviewed prior to submission to confirm that expenditures are charged to the correct approved budget line items. This may include maintaining a reconciliation between the general ledger, the approved grant budget, and the Form 19‑1A, as well as implementing supervisory review and approval of reimbursement submissions. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Reporting Recommendation: We recommend that the auditee implement procedures to ensure that Form 19-lA reimbursement requests are reviewed prior to submission to confirm that expenditures are charged to the correct approved budget line items. This may include maintaining a reconciliation between the general ledger, the approved grant budget, and the Form 19-lA, as well as implementing supervisory review and approval of reimbursement submissions. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. 2026 Action taken in response to finding: Reoccurring bills such as utilities, loan payments, contract services and credit card payments do not require an expense request to be included for on going bills. We will review our procedures and update our financial policy. 2023 Our financial process includes at least two reviews prior to creating a bill in our accounting system, payments are reviewed by the director or the Deputy Director when signed. We do not use a auto signature all checks are reviewed. 2023 The Grantor billing is a P&L detailed report for that grant and provides reconciliation monthly This is sorted into grant line items designated billable and non-billable for compliance. Total program cost and billable to grant are tracked every month, by the grant finance manager for compliance prior to billing any grants. Timecards are reviewed, expense requests are reviewed and payments are reviewed. Prior to submission of the invoice to grantor. 2023 Grant finance manager pulls copy of timecards, bills and checks to ensure compliance with reimbursements are accurate. Name(s) of the contact person(s) responsible for corrective action: Cora Alyea Planned completion date for corrective action plan: July 2023
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance requires non‑Federal entities to use documented procurement procedures consistent with applicable federal standards (2 CFR §§200.317–200.327). In addition, Uniform Guidance requires non‑Federal entities to maintain written standards of conduct governing conflicts of interest and organizational conflicts of interest for employees, officers, and agents engaged in the selection, award, and administration of federal awards (2 CFR §200.318(c)(1)). Condition: The auditee did not have a written procurement policy or a written conflict of interest policy in place during the audit period. As a result, the auditee did not have formal, documented procedures to govern procurement activities or to address potential conflicts of interest related to the administration of federal awards. Context: Procurement and conflict of interest are required compliance areas to be evaluated under the OMB Compliance Supplement for the Single Audit. As part of obtaining an understanding of internal control over compliance, the auditors evaluated whether the auditee had established the required written procurement procedures and standards of conduct addressing conflicts of interest. During this evaluation, it was noted that the auditee did not have a written procurement policy or a written conflict of interest policy in place during the audit period. Cause: The auditee has not formally documented or adopted procurement and conflict of interest policies as required by Uniform Guidance. While management performs certain procurement and oversight activities informally, these practices have not been codified into written policies to ensure consistent application and compliance with federal requirements. Effect: The absence of formal procurement and conflict of interest policies increases the risk that procurement activities may not be conducted in accordance with Uniform Guidance requirements and that actual or perceived conflicts of interest may not be appropriately identified, disclosed, or mitigated. Without documented policies, the auditee is at increased risk of noncompliance with federal award requirements related to procurement standards and ethical conduct. Repeat Finding: Yes. Recommendation: We recommend that management develop, adopt, and implement written procurement and conflict of interest policies that comply with Uniform Guidance requirements. These policies should address procurement standards, including methods of procurement and oversight, and establish standards of conduct governing conflicts of interest for employees, officers, and agents involved in the administration of federal awards. Management should also ensure that these policies are communicated to relevant personnel and applied consistently. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Procurement Recommendation: We recommend that management develop, adopt, and implement written procurement and conflict-of-interest policies that comply with Uniform Guidance requirements. These policies should address procurement standards, including methods of procurement and oversight, and establish standards of conduct governing conflicts of interest for employees, officers, and agents involved in the administration of federal awards. Management should also ensure that these policies are communicated to relevant personnel and applied consistently. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: In 2024 new maintenance staff was employed 3 bids are required for capital projects. If one contractor has personal relationship with employee conflict of interest form is filed. Name(s) of the contact person(s) responsible for corrective action: Kristin Cowan Planned completion date for corrective action plan: July 2024
2022-001
Criteria or specific requirement: 2 CFR § 200.303 of the Uniform Guidance states organizations must establish a system of internal controls to ensure compliance with federal statutes, regulations and award terms over allowable costs and activities. Condition: During the audit, we identified instances where we could not verify review and approval for cash and payroll disbursements were completed. Context: Four out of the 40 cash disbursements tested lacked evidence of approval on payment requests or invoices. Two out of the 40 payroll disbursements tested lacked appropriate time and effort approval by supervisor. Cause: Lack of adherence to internal controls as designed by Serenity House. Effect: The lack of review and approval could lead to improper costs charged to federal awards. Repeat Finding: No. Recommendation: Incorporate regular review and approval procedures on invoices, payment requests and payroll time and effort documents. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Significant Deficiency in Internal Control over Compliance Details: During the audit, we identified instances where we could not verify review and approval for cash and payroll disbursements were completed. Recommendation: Incorporate regular review and approval procedures on invoices, payment requests and payroll time and effort documents. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: • Invoices and payments are placed on an expense request form for each purchase and are to be signed by the authorization designated threshold prior to payment verified by accounts payable. • Payroll process implemented in early 2024: to double check and initial timecards with employee entries and supervisor signature, and to verify entries and sign payroll QuickBooks print out prior to check printing. This verification document is filed with the payroll timecards. Name(s) of the contact person(s) responsible for corrective action: Kristin Cowan Planned completion date for corrective action plan: Feb 1 2024
Criteria or specific requirement: 2 CFR §200.318(a) of the Uniform Guidance states recipients of federal awards must maintain and use documented procedures for procurement transactions under a federal award, including for acquisition of property or services. These procedures must align with Uniform Guidance Standards. 2 CFR §200.318(c) of the Uniform Guidance states organizations must maintain written standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts. Condition: No formal policy for procurement or conflict of interest exists. Context: During procurement purchase testing, it was noted no formal policy over procurement or conflict of interest existed that met the requirements of 2 CFR §200.318(a) & 2 CFR §200.318(c). Cause: Serenity House was not aware of the requirements in the Uniform Guidance. Effect: If there were procurement purchased over the micro purchase threshold of $10,000, Serenity House could be out of compliance with federal grants. Repeat Finding: No. Recommendation: Recommend adopting a procurement and conflict of interest policy that aligns with Uniform Guidance. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
Significant Deficiency in Internal Control over Compliance Details: During procurement purchase testing, it was noted no formal policy over procurement or conflict of interest existed that met the requirements of 2 CFR §200.318(a) & 2 CFR §200.318© Recommendation: Recommend adopting a procurement and conflict of interest policy that aligns with Uniform Guidance. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: Include Conflict of interest in current financial management plan. The recipient or subrecipient must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. No employee, officer, agent, or board member with a real or apparent conflict of interest may participate in the selection, award, or administration of a contract supported by the Federal award. A conflict of interest includes when the employee, officer, agent, or board member, any member of their immediate family, their partner, or an organization that employs or is about to employ any of the parties indicated herein, has a financial or other interest in or tangible personal benefit from an entity considered for a contract. An employee, officer, agent, and board member of the recipient or subrecipient may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors. However, the recipient or subrecipient may set standards for situations where the financial interest is not substantial or a gift is an unsolicited item of nominal value. The recipient's or subrecipient's standards of conduct must also provide for disciplinary actions to be applied for violations by its employees, officers, agents, or board members. Name(s) of the contact person(s) responsible for corrective action: Cora Alyea Planned completion date for corrective action plan: October 17, 2025
FINANCIAL STATEMENTS 2021-001 Record and reconcile transactions in the general ledger in accordance with generally accepted accounting principles (?GAAP?). Criteria: To provide accurate financial reports, the Organization should reconcile the general ledger accounts for cash, accounts receivable, accounts payable and all other account balances, such as loan balances, fixed assets, payroll tax payable, refundable advances, etc. to supporting documentation on a monthly basis. In addition, good internal controls include ensuring that accurate and complete financial statements are prepared in accordance with generally accepted accounting principles (GAAP). Condition: The Organization did not adhere to a monthly reconciliation process to ensure the general ledger reflects the account balances of the Organization in accordance with generally accepted accounting principles. We noted the following material items during the audit: ? Cash was overstated by $91,716 due to duplicate deposits. ? Undeposited funds decreased by $332,124. ? Account receivable increased by $309,452. ? Vacation payable decreased by $20,387. ? Bad debt expense increased by $24,701. ? Inventory increased by $24,098. ? Thrift store revenue decreased by $63,325. ? Prior period adjustment of $250,715. ? Depreciation expense recorded in the amount of $244,325. ? Accrued payroll increased by $23,409. ? Deferred revenue increased by $81,388. ? Rental income decreased by $75,055. ? Worker?s compensation expense decreased by $32,508. ? Construction in progress increased by $321,505. Cause: The Organization did not have staff with the appropriate accounting experience or qualifications to record and reconcile transactions according to generally accepted accounting principles. Effect: The Organization is not able to produce financial statements in accordance with GAAP. Extra accounting effort and resources are required for audit preparation which is costly and inefficient. Recommendation: We recommend the Organization engage an individual with the appropriate accounting experience to complete a review of all general ledger accounts on a monthly basis in accordance with GAAP.
In review of the Baker, Overby and Moore audit recommendations Serenity House of Clallam County shall pursue an outside agency to correct the conditions outlined in previous audits, send 4 staff members to certified government accounting classes. Correction in place to meet the requirements of recommendations by next audit.
FINANCIAL STATEMENTS 2019-001 Reconciliation of general ledger accounts Criteria: To provide timely and accurate financial reports, the Organization should reconcile the general ledger accounts for cash, accounts receivable, accounts payable and all other account balances, such as loan balances, fixed assets, etc. to support documentation on a monthly basis. In addition, good internal controls include ensuring that accurate and complete financial statements are prepared in accordance with generally accepted accounting principles (GAAP). Condition: The Organization did not adhere to a monthly reconciliation process to ensure the general ledger reflects the account balances of the Organization a monthly basis. We noted the following specific items during the course of the audit: ? We properly reclassed 234 outstanding checks that totaled $194,087 to accounts payable. ? Thrift store inventory was increased by $18,981. ? Property assumed by the Organization was recorded as a fixed asset in the amount of $549,231. ? Deferred revenue increased by $113,778. ? Reclassed a credit of $58,320 in fixed assets to a restricted contribution. ? Vacation payable increased by $23,059. ? Salaries and wages increased by $45,237. ? Fixed assets were reduced by property given back to original owner in the amount of $534,988. ? Long-term debt was reduced by property given back to original owner in the amount of $427,216. ? Grant revenue was increased by $287,034. ? Grant receivables were increased by $146,856. ? Prior period adjustment $130,657. ? Recorded current year depreciation of $193,001. Cause: The Organization did not have sufficient qualified staff available to perform the necessary reconciliations or prepare year-end financial statements. Insufficient monitoring and timely review of transactions may also have contributed to this condition. Effect: The Organization is not able to produce accurate and timely financial statements for use by management or at year-end. Extra accounting effort and resources are required for audit preparation which is costly and inefficient. Recommendation: We recommend the Organization complete a reconciliation of all general ledger accounts on a monthly basis in accordance with GAAP.
Auditee Response Serenity House of Clallam County agrees with the audit findings of insufficient monitoring and staff to provide adequate documentation to inspire high marks in audit results. Serenity House by July 23,2019 hired a business development manager that was transitioned to financial business manager by September 23, 2019. The previous business manager resigned August 6th and stayed for partial training until October 6th, 2019. A part-time payable person resigned and left Sept 23, 2019. By year end there were additional qualified employees in training. The business office/accounting staff was increased from 2 ? to 3 employees. During 2019 the Executive Director, Richard Robinson worked diligently to reduce Serenity House risk in a plan to minimize assets and therefore associated expenses to improve organization?s financial state. This included the return of properties to reduce long-term debt. Sunbelt property was assumed from Housing Authority along with restricted maintenance funds that repaired a faulty sewer system. Tempest was closed due to excessive health and safety issues. It was recognized at an internal level that even these moves would not be sufficient to stabilize the organization. The replacement of the executive director was made in March 2020. Business manager moved to Executive Director in April 2020. two new positions developed a grant financial manager to monitor monthly billing and reporting compliance and budget tracking for all grants, and a full-time business development manager that would focus grant writing and fund raising for un-funded programs within the approved capital and strategic program goals. Oct 6 2019 Business Manager and accounts payable and payroll/receivable staff begin an evaluation of MIP accounting system, grant billing, payables, payroll time keeping, banking and MIP software set up. It was evident that there were periods of different accounting methods employed by different accountants and some modules in MIP had not been purchased which minimized accounting capability and consistency The financial team recommended to the executive director and the board of directors in October 2019 to purchase QuickBooks, no new program funding until all existing programs are fully funded, implement new timecards, account assignment, director approval prior to expense, guideline matrix and budget for grants to directors, update employee manual, strategic and capital plan, account mapping and minimum wage increases. The above items were in place for the beginning of 2020. Grant Revenue: The thrift store opens show case furniture and appliance store in 2019 increasing inventory and revenue. The financial office pushed the agency to secure capital improvement and operational grant funds for unfunded housing operations in September - October 2019. Housing Preservation grants were awarded in Dec 2019 for $670,000.00 for three site improvement programs contacts signed in January 2020. Operations and Maintenance (O&M) funds of $460,000.00 were awarded December 2019 and contracts were signed in January 2020. The operation and maintenance grants had a performance period of July 2019 to June 2020 Serenity House could recoup operating expenses for part of 2019 for two sites. The capital projects performance period is 2020 to 2021 therefore not in 2019 financials. The goal for 2020 is fully funded adult congregate emergency shelter and low-income housing and homeless youth operations and retain Clallam County Coordinated Entry contracts. Much of the accounting teams focus in 2019 were on these items ? Gaining access to government billing systems example ELOCCs took Aug 2019 through Dec 2019. ? Identifying gaps in service delivery and billing with grantors timecard changes and accountancy ? Smooth operational transition from MIP software to QuickBooks software complete Jan 1 2020 ? Creating financial tools that are transparent and useable for staff and funders ? Business manager grant writing and billing practices, benchmarks QuickBooks was in place by January 1, 2020. There were some carry over items of checks, invoices that were billed or paid in previous MIP software, but actual check or funds receipt had to be accepted in January 2020. These items have been identified for journal entry by the accountant. Employees were evaluated and those making under minimum wage were adjusted to 13.50 per hour. At this time employee polices, and initiatives were established to address high turnover and accountancy. Which includes for 2020 salary range survey, grant specific timecard line items and health benefits. The increase in vacation time and wages were a result of vacation payout for turnover and salary increases.
Data source: This information comes from the Federal Audit Clearinghouse, the official repository of Single Audit data. All data is public domain. Verify this organization's audit history at fac.gov.
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